Federal Court appeal judges have ruled covid-related business interruption claims involving QBE and Lloyd’s policyholders should not be heard as a class action, leaving the individual matters to the insurers.

“We consider that the QBE and Lloyd’s representative proceedings do not provide an efficient and effective means of dealing with the claims of group members, and that it is in the interests of justice that the proceedings no longer continue,” their judgment said.

In 2024, Justice Michael Lee ruled against covid-related business interruption claims involving four insurers proceeding as class actions. Appeals in two of the matters were heard last August.

The decision delivered by justices Nye Perram, John Halley and Catherine Button on Wednesday has been welcomed by the Insurance Council of Australia, which undertook two legal test case processes to address covid-related business interruption issues.

“The decision confirms that insurance claims are more appropriately dealt with through insurers’ established claims handling and dispute resolution processes and, where appropriate, existing regulatory frameworks,” a spokesperson said.

The judgment says that while 36,000 QBE insureds held relevant policies, only 580 had made claims as of July 2024. For Lloyd’s, 10 claims had been lodged and declined.

“Within the cohort of insured, there was substantial variation in the QBE action, arising from factors including the existence of 28 different relevant forms of policy wording,” the judges said.

Whatever the views on “whether the test case approach was sensible”, following that process, insurers internal mechanisms “stand ready” to address claims, the ruling says.

“This court is not, nor would it be efficient to render it, in effect, an insurance claims handling clearing house, still less so where it is likely an initial trial would have limited utility in providing a framework of binding findings in respect of the identified questions.

“By contrast, handling individual claims is what insurers do, day in, day out.”

The ruling says it cannot be assumed that insurers would deny claims that would ultimately succeed through group proceedings.

QBE has welcomed the decision, including the finding that insurers’ processes are “a much more efficient mechanism” for determining the claims.

“The judgment does not impact claims already lodged, and customers may continue to lodge new claims directly with QBE,” a spokesperson told insuranceNEWs.com.au.

The insurer says it will continue to assess covid-related claims consistent with principles established in the test cases.

See the decision here.